Electrocomponents disappoints despite improving group revenues

24th Jul 2014 13:25

Softer trading in France and the UK meant the first-quarter update from Electrocomponents disappointed investors despite improving group revenue growth.Group underlying sales growth in the first quarter was 3%, with combined sales growth across the latter two months of May and June of 4%.Chief Executive Ian Mason said: "There has been further progress implementing our global strategy and performance in all markets was good with the exception of the UK and France."International operations, which represent 70% of group revenue, increased sales by 5% with both North America and Asia Pacific up 8%.The disappointment stemmed from the weakness in France, which meant Europe was only up 2%. Furthermore, the UK market was soft and declined 2%.Gross margins also fell 0.8% points compared to the same period in the prior period, which was explained by the effects of product mix due to the stronger sales growth in North America and the Famous For product categories, and increased discounting in the UK and Asia Pacific.Mason said management was taking action to improve the sales performance in the UK and France and the gross margin in Asia Pacific, and, according to broker N+1Singer, had seen encouraging early signs and France along with targeted gross margin improvement in Asia.Cash generation is described as good and there has been "no significant change" to the group's financial position.Shares in the company were down 5.7% to 243.6p at 12:55 on Thursday.OH